Romney adviser: U.S. oil renaissance needs tax breaks

Ending a tax break that lets oil companies quickly deduct labor and other drilling costs would be a devastating hit on the country's booming energy sector, a top energy adviser to Republican Mitt Romney's presidential campaign told lawmakers on Tuesday.

Harold Hamm, the Oklahoma billionaire who runs Continental Resources Inc told the Senate Finance Committee that his company would have to cut a third of its drilling if the industry lost the "intangible drilling costs" break when Congress overhauls the U.S. tax code.

"We could stop this energy renaissance. We certainly do not want to do that," Hamm told lawmakers at a hearing on tax reform and energy policy.

The hearing was part of a series that Max Baucus, a moderate Democrat from Montana, has been holding for more than a year as lawmakers gear up for tax code reforms after the November 2012 elections.

Hamm, a pioneer in using new hydraulic fracturing technology often referred to as "fracking" to open up vast domestic supplies of oil and natural gas, said his comments did not reflect the policy of Continental Resources or the Romney campaign.

"I'm not here on behalf of the Romney campaign," he said.

Tax breaks for the booming oil and gas sector have attracted political scrutiny ahead of the November elections and with high gasoline costs.

President Barack Obama has proposed ending tax breaks for the industry's largest players, like Exxon Mobil and Chevron.

ENERGY TAX "OPPORTUNITY"-ECONOMIST

A Harvard University economist told lawmakers that tax reform provides an "opportunity" to create a new tax on fossil fuel use that would reflect the health costs of pollution from coal plants and oil used for fuel.

"In order to have a truly level playing field, we need to recognize the environmental hidden costs associated with the combustion of fossil fuels," Dale Jorgenson said.

The tax could raise total revenues of 1.5 percent of gross domestic product, he said.

Reflecting data on health costs from fossil fuel use, the tax would fall hardest on coal at $108 per short ton and oil, at $16.30 per barrel, Jorgenson said.